Can You Have a Good Credit Score After Bankruptcy?

 Posted on January 22, 2024 in Credit Score

Filing for bankruptcy can seem like a last resort when faced with a consistently growing debt pile. It is understandable to worry about the long-term impacts on your financial life. However, bankruptcy does not have to ruin your credit score forever. With some strategic steps, you can rebuild your credit and improve your score after bankruptcy. A Texas bankruptcy lawyer can help point you in the right direction and help you properly go through the bankruptcy process.

The Bankruptcy Process and Your Credit

When you file for Chapter 7 or Chapter 13 bankruptcy, the court discharges some or all of your eligible debt. However, the bankruptcy remains on your credit report for 7-10 years, depending on the chapter you filed. This can cause an immediate drop in your credit score.

The good news is credit scoring models, and lenders understand that bankruptcy does not necessarily define your commitment to paying off debt. You can gradually rebuild your score with consistent, responsible credit behaviors in the months and years after your bankruptcy discharge.

Establishing Responsible Credit After Bankruptcy

Here are some tips for responsibly managing your credit to improve your score after bankruptcy:

• Get a Secured Credit Card- Secured cards require a refundable security deposit and are more readily available to applicants with bankruptcies and poor credit. Use the card lightly and make on-time payments.
• Become an Authorized User- Ask a family member or friend with a long positive credit history to add you as an authorized user to their credit card. This can provide a credit score boost.
• Limit New Credit Applications- Each credit application can drop your score a few points. Apply conservatively for only the credit you need.
• Pay All Bills on Time- Payment history is the most significant factor in credit scores. Pay all utilities, loans, and credit cards on time every month.
• Check Credit Reports Regularly- Check your credit by checking reports for errors or suspicious activity. Dispute any inaccuracies with the credit bureaus.

Be Patient As Your Score Improves

The recovery process takes diligence and patience, but creditors and lenders usually only consider bankruptcies from the past 2-4 years to be major negative factors. As time passes beyond that window, your credit score can climb to over 700 or higher with responsible behaviors. By continuing to manage credit carefully and pay debts on time every month, almost any consumer has the power to rebuild good credit post-bankruptcy.

Contact a Kerrville, TX Bankruptcy Attorney

Going through this process can be less overwhelming with a Boerne, TX bankruptcy lawyer on your side. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation. You deserve a fresh start.